Opinion
Case No. 08-35291. Adv. No. 09-3080.
12-2-2009
In re: ERIN ELAINE STEWART, Debtor. RUTH A. SLONE, Chapter 7 Trustee, Plaintiff, v. NISSAN MOTOR ACCEPTANCE CORP., Defendant.
Ruth A. Slone, P.O. Box 3340, Dayton, OH 45401-3340 (Chapter 7 Trustee and Plaintiff) Lee A. Slone, 2747 W. Alex-Bell Road, PO Box 3340, Dayton, OH 45401-3340 (Counsel for the Plaintiff) Stephen R. Franks, PO Box 968, 2450 Edison Boulevard, Twinsburg, OH 44087 (Counsel for the Defendant) Erin Elaine Stewart, 1330 Phoenix Place, Kettering, Ohio 45420 (Debtor) Lee Hohl, 1839 East Stroop Road, Kettering, Ohio 45429-4925 (Counsel for the Debtor)
On April 3, 2009 the Chapter 7 Trustee, Ruth Slone (the "Trustee"), filed a complaint against Nissan Motor Acceptance Corporation ("Nissan") seeking to avoid a preference pursuant to 11 U.S.C. § 547, recover the transfer pursuant to § 550, preserve the transfer for the benefit of the Chapter 7 estate pursuant to §§ 550 and 551, and disallow any claim of Nissan pursuant to § 502(d) (Doc. 1). Nissan filed an answer on May 5, 2009 (Doc. 2). On October 30, 2009 the Trustee moved for summary judgment (Doc. 15) (the "Motion"). Nissan has not filed a response to the Motion. See Order Establishing Briefing Schedule — Doc. 13 and the docket for this adversary proceeding.
Unless otherwise noted, all statutory references are to the Bankruptcy Code of 1978, as amended, 11 U.S.C. §§ 101-1532 (the "Code"), cited hereinafter in this decision as "§ ____".
Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 1334 and this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(F).
Summary Judgment Standard
The standard to address the filings is contained in Federal Rule of Civil Procedure (FRCP) 56(c) and is applicable to adversary proceedings through Bankruptcy Rule 7056 and states, in part, that a court must grant summary judgment to the moving party if:
the pleadings, the discovery and disclosure statements on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law.
FRCP 56(c). In order to prevail, the moving party, if bearing the burden of persuasion at trial, must establish all elements of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986). If the burden is on the non-moving party at trial, the movant must: 1) submit affirmative evidence that negates an essential element of the nonmoving party's claim or 2) demonstrate to the court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim. Id. at 331-332. Thereafter, the opposing party "must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citations omitted); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-51 (1986). All inferences drawn from the underlying facts must be viewed in a light most favorable to the party opposing the motion. Matsushita, 475 U.S. at 586-88.
Findings of Fact
The facts are undisputed. On July 23, 2008, the Debtor borrowed $ 20,079.57, entered into a retail installment contract to purchase a Nissan Maxima from a Nissan dealership, and granted a security interest in the Nissan Maxima (Doc. 1, ¶5, Doc. 3, ¶3). The security interest was subsequently assigned to Nissan. Id. The lien was noted on the certificate of title on August 26, 2008 (Doc. 1, ¶6, Doc. 3, ¶4). The court takes judicial notice that August 26, 2008 is 34 days after July 23, 2008. The Trustee agrees in her summary judgment motion that the documents necessary to perfect the lien were delivered to the clerk of court on August 18, 2008, which is 26 days after July 23, 2008 (Doc. 15, p. 7). The Debtor, Erin Elaine Stewart, filed a Chapter 7 petition on October 24, 2008 (Doc. 1, ¶4; Doc. 3, ¶1), within ninety (90) days of the noting of Nissan's lien on the certificate of title.
Analysis
The lien of Nissan constitutes a preference under § 547(b). As the court described in a recent decision:
In order for a trustee to avoid a preferential transfer of an interest in debtors' property, the trustee must show that the transfer (1) was to or for the benefit of a creditor; (2) was made on account of an antecedent debt owed by the debtor prior to the transfer; (3) was made while the debtor was insolvent; (4) occurred within ninety days of the petition date if the creditor was not an insider of the debtor (and within one year of the petition date if the creditor was an insider of the debtor); and (5) enabled the creditor to receive more than it would have received if the transfer had not occurred and the case proceeded as a liquidation case under Chapter 7. 11 U.S.C. § 547(b); Yoppolo v. MBNA America Bank, N.A. (In re Dilworth), 560 F.3d 562, 563-64 (6th Cir.2009). The Trustee bears the burden of proving each of these requirements. 11 U.S.C. § 547(g).
Rieser v. Fifth Third Mortgage Co. (In re Wahl), 407 B.R. 883, 893 (Bankr. S.D. Ohio 2009).
In this instance, the transfer of the security interest was for the benefit of the creditor, Nissan; the security interest was made on account of an antecedent debt, the installment loan; the debtor is presumed insolvent (§ 547(f)) and Nissan has submitted no evidence to the contrary; the transfer, which was the noting of the lien on the certificate of title, occurred within 90 days of the petition date; and, due to the fact that all creditors in this Chapter 7 will not be paid in full as shown by the Debtor's schedules and the Trustee's filings, the transfer enabled Nissan to receive more than it otherwise would in the Chapter 7.
As stated in In re Knee, "Federal courts have consistently held that the grant of a security interest in a motor vehicle constitutes a § 547(b) transfer." 254 B.R. 710, 712 (Bankr. S.D. Ohio 2000).
Thus, since the Trustee has established a preference, the burden shifts, both under the substantive preference law (§ 547(g)) and summary judgment procedure, to Nissan to demonstrate an affirmative defense to the preference to defeat the Trustee's motion. Nissan has not brought forth any evidence and, therefore, the Trustee's motion must be granted. Even if it had, the Trustee correctly notes that Nissan's apparent original position in this adversary proceeding is incorrect.
Section 547(c)(3)(B) provides an affirmative defense, the" enabling-loan defense," for a purchase money security interest perfected within 30 days of the acquisition of the underlying collateral. Luper v. Guardian Fin. Co. (In re McAlmont), 385 B.R. 191, 196 (Bankr. S.D. Ohio 2008). Pursuant to § 547(e)(1)(B), the transfer, with exceptions not relevant, is perfected "when a creditor on a simple contract cannot acquire a judicial lien that is superior to the interest of the transferee." The method of perfecting the motor vehicle in question is governed by Ohio law. Noland v. HSBC Auto Finance, Inc. (In re Baine), 393 B.R. 561, 566 (Bankr. S.D. Ohio 2008). The manner of perfection of a motor vehicle in Ohio is to note the lien on the vehicle title. Ohio Revised Code § 4505.13(B); Baine, 393 BR. at 566. Merely providing the document to the clerk of court is not sufficient. In re Reaster, 242 B.R. 423, 426, n. 2 (Bankr. S.D. Ohio 1999) ("[A] creditor could not defend a preference action based on 11 U.S.C. § 547(c) if its lien was not timely noted on the certificate of title, even if the delay was caused solely by the court clerk."). Since the lien was noted on the vehicle title more than thirty (30) days after the vehicle was purchased by the Debtor, and therefore perfected outside the thirty (30) day window of § 547(c)(3), this affirmative defense is inapplicable. Nissan's lien is avoided as a § 547 preference.
11 U.S.C. § 547(c)(3) states, in essence, that, when a creditor is granted a purchase money security interest" that is perfected on or before 30 days after the debtor receives possession of such property," such timely perfection constitutes an affirmative defense to a prima facie preference claim.
The Trustee may recover the avoided lien under § 550 and such avoided transfer is preserved for the benefit of the estate. 11 U.S.C. §§ 547 and 551. Finally, subject to compliance with the provisions of 11 U.S.C. § 502(d), any claim of Nissan against the Chapter 7 estate is disallowed.
Conclusion
The security interest of Nissan on a 2007 Nissan Maxima, VIN 1N4BA41E17C806192, is avoided pursuant to 11 U.S.C. § 547 and the avoided transfer may be recovered pursuant to 11 U.S.C. § 550 for the benefit of the Chapter 7 estate. Subject to compliance with the provisions of 11 U.S.C. § 502(d), any claim of Nissan against the Chapter 7 estate is disallowed. The court will simultaneously enter an order consistent with this decision.
IT IS SO ORDERED.